Legislature(2005 - 2006)SENATE FINANCE 532
04/28/2006 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SJR20 | |
| SB272 | |
| SB309 | |
| SB317 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SJR 20 | TELECONFERENCED | |
| + | SB 272 | TELECONFERENCED | |
| + | SB 309 | TELECONFERENCED | |
| *+ | SB 317 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
April 28, 2006
9:13 a.m.
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately
9:13:55 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: SENATOR RALPH SEEKINS; AMY STEITZ, Staff to
Senator Tom Wagoner; SCOTT NORDSTRAND, Commissioner, Department
of Administration; GREG O'CLARAY, Commissioner, Department of
Labor and Workforce Development; TOM MAHER, Staff to Senator
Therriault; MIKE ANDREWS, Director, Alaska Works Partnership
Inc.; JOHN BITNEY, Lobbyist, Alaska State Homebuilders
Association;
[NOTE: Public testimony on SJR 20 was presented in the order
depicted in the minutes. In addition, all testimony was
presented in Juneau unless otherwise noted.]
Attending via Teleconference: From Anchorage: MARK DAVIS,
Director, Division of Banking & Securities, Department of
Commerce, Community and Economic Development; ROGER PRINCE,
Department of Commerce, Community and Economic Development; JOE
BRAMMER, Alaska Association of Mortgage Brokers; JOHN MARTIN;
KEN GAIN, Secretary/Treasurer, Independent Lenders of Alaska;
JOHN CARMAN, Past President, Alaska Mortgage Bankers
Association; MIKE SAMSON, President, Samson Electric; BILL
WATTERSON, President, Watterson Construction; JULIE AUNE, Vice
President, AAA Fence; REBECCA LOGAN, President, Associated
Building and Contractors (ABC) of Alaska; from Fairbanks: DOUG
ISAACSON, Past President, Alaska Association of Mortgage
Brokers, President, Gold Coast Mortgage; JAY QUAKENBUSH,
President, Building and Construction Trades; JIM LAITI, Business
Manager, Pipefitters Local 375; CLICK BISHOP; MIKE SEXTON,
Executive Director, Mechanical Contractors of Fairbanks; WENDY
REDMAN, University of Alaska; from an offnet location: GREG
WILLIAMS, Regional Director of State Government Affairs,
American Financial Services Association (AFSA); LAURIE HOLT,
Officer of Residential Lending, Mortgage Operations, Alaska
Housing Finance Corporation (AHFC), Department of Revenue;
RICHARD CATTANACH, Executive Director, Associated General
Contractors; DAN FAUSKE, CEO, Alaska Housing Finance
Corporation.
SUMMARY INFORMATION
SJR 20-CONST. AM: BENEFITS & MARRIAGE
The Committee heard from the bill's sponsor, adopted a committee
substitute, and took public testimony. The bill reported from
Committee.
SB 272-MORTGAGE LENDING
The Committee heard from the bill's sponsor, the Department of
Commerce, Community and Economic Development, the Alaska Housing
Finance Corporation, and industry representatives. A committee
substitute and two amendments were adopted and the bill was
reported from Committee.
SB 309-CONSTR. TRAINING GRANT; UNEMPLOYMENT COMP.
The Committee heard from the bill's sponsor, the Department of
Labor and Workforce Development, and industry representatives.
The bill was reported from Committee.
SB 317-ANCHORAGE PARKING GARAGE
The Committee heard from the Department of Administration and
the bill was reported from Committee.
SENATE JOINT RESOLUTION NO. 20
Proposing an amendment to the section of the Constitution
of the State of Alaska relating to marriage.
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Green moved to adopt CS SJR, 20 24-LS1676\G as amended,
as the working document, and then objected for explanation
purposes.
SENATOR RALPH SEEKINS, Chair, Senate Judiciary Committee which
sponsored the bill, noted that the committee substitute would
add the following language to the "Marriage Amendment", Art. 1,
Section 25, of the State's Constitution, which specifies
marriage as a union solely between one man and one woman.
…No other union is similarly situated to a marriage. No
provision of this constitution shall be construed to
require that marriage or the legal incidents of marriage be
conferred on a union other than the union of a man and
woman.
Senator Seekins disclosed that the proposed language was based
on language in Senate Joint Resolution 1 (SJR 1) as introduced
in the United States Senate.
9:16:10 AM
Senator Seekins continued that the adoption of Version "G" would
align the State with the policy included in the U.S.
Constitution, which would allow "reciprocal beneficiary
contracts to exist". Such a policy currently exists within the
University of Alaska system, where policy specifies that couples
in a "mutual beneficiary relationship" who meet specified
criteria could qualify for insurance benefits. Approximately 113
couples are qualified under the University's program.
Senator Seekins further noted the bill would allow the
University to expand its definition of "mutual beneficiary" to
include "a mother and her son or two brothers". It would also
allow an employer to provide benefits to individuals based on
existing contract law "such as legal arrangements to co-own or
inherit property, medical visitation decision-making,
guardianship of children, medical benefits." While the bill
would "expand the universe of those people" who would qualify
for a mutual beneficiary relationship, the employer would be
allowed to establish their own guidelines.
9:18:33 AM
Senator Seekins considered the proposed changes to be a "good
policy" which "could be defended" from differing perspectives.
It would also "preserve the institution of marriage". He asked
for the Committee's support.
9:19:00 AM
Senator Dyson ascertained therefore that Version "G" would
return the State to the policy position which existed prior to
the October 2005 Alaska Supreme Court ruling on the case ACLU v.
State & Municipality of Anchorage. That position was
"permissive" in "that State organizations are free to enter into
these kinds of relationships as they choose".
Senator Seekins affirmed.
Senator Dyson recognized the policy as permissive because it
would allow State organizations to choose whether or not to
provide benefits to individuals in "these kinds of
relationships".
Senator Seekins responded that while Version "G" would permit
it, "it would no longer require" as the Court's ruling did, that
"someone who cannot be legally married under law would have to
be treated as if they were married. And the extension of that,
and the expansion of that, is much greater than the particular
case" upon which the State Supreme Court ruled. This bill would
allow beneficiary relationships, "but it does not require any
longer that you treat … someone who cannot be married as if they
were married".
9:20:12 AM
Senator Dyson understood that a man and a woman who were not
married are recognized as a couple under the University's
policy. That particular union was not addressed in the Supreme
Court ruling. Thus, the language proposed in this resolution
would make that situation permissible whereas before it could be
argued "it was not, in terms of heterosexual couples".
Senator Seekins concurred. An unmarried man and woman could
qualify under the language being proposed.
Senator Dyson reemphasized that the benefit determination would
be a choice of the institution or political subdivision.
Senator Seekins affirmed.
9:21:14 AM
Senator Bunde asked for confirmation that this language would
permit domestic partnerships "including a mother and son or any
other combination of people" to qualify.
Senator Seekins affirmed.
9:21:41 AM
Senator Bunde discerned that Version "G" would allow "an entity
of the State then to recognize" such domestic partnerships "for
purposes of benefits".
Senator Seekins replied "yes"; the recognition would be based
"on a mutually dependent situation" rather than being based "on
the premise of rights or privileges of marriage or sexual
expressions".
Senator Bunde asked whether the policy could be interpreted as
lowering "the choice to discriminate to a municipal level".
Senator Seekins expressed that rather than expanding
discrimination, this resolution would expand an employer's
choice. It would not require an employer "to provide benefits to
someone that isn't legally married", but it would allow an
employer to provide benefits if they chose, to someone in a
mutually beneficial relationship.
Senator Bunde had heard that qualifying criteria had been
incorporated into the previous version of this resolution to
address the concern that "these mutually beneficial
relationships would cost the State a lot of money". Thus, his
understanding now was that Version "G" would not save the State,
University, or municipality any money.
Senator Seekins expressed that passage of this resolution might
incur costs to the State. To that point, he stated that of the
University's 7,000 employees, less than 120 mutual beneficiary
relationships have been formalized. Less than 20 of those 120
were same sex couples. While this is not a huge number, some
financial impact could be incurred to the State were the
University's policy incorporated into the State's collective
bargaining systems and offered to all State employees.
9:24:02 AM
Senator Bunde remarked therefore that the adoption of Version
"G" would negate the argument "that preventing these
relationships would save money".
Senator Seekins affirmed. He noted he had never argued that
position.
Co-Chair Green announced that public testimony would be limited
to two minutes. Also in consideration of the time, she asked
that those who had previously testified on the bill not present
repetitious testimony.
9:25:06 AM
Senator Seekins noted that Kevin Clarkson, a consultant to the
Legislature on this issue, would be available via teleconference
to respond to Member's questions.
Co-Chair Green, observing that 20 people had at this point
signed up to testify, again directed that testimony be concise.
9:25:50 AM
Senator Olson asked Senator Seekins to further clarify how this
resolution would affect a heterosexual unmarried couple, with or
without children.
Senator Seekins stated the adoption of Version "G" would allow
those individuals to be recognized as being in a mutual
beneficiary relationship; coverage could be extended to them if
the employer opted to.
Senator Olson understood therefore that a private employer would
be required to recognize these relationships under a legislative
mandate.
Senator Seekins responded no, a private employer would have the
option to offer such benefits. While a private employer
currently has a number of beneficiary options, he or she is not
required to provide beneficiary coverage to employees. While
many employers currently do so, the employer has the right to
negotiate options.
Senator Seekins was uncertain as to whether the aforementioned
State Supreme Court ruling might have required private employers
to provide benefits they provided to married couples "to someone
that legally was not allowed to be married". Nonetheless, the
adoption of Version "G" would allow any employer, private or
public, to provide mutual beneficiary coverage if it chose to.
9:28:20 AM
DIXIE HOOD, Licensed Marriage and Family Therapist, appreciated
the opportunity to speak "on this important piece of
legislation". She was "alarmed and offended that our
representative democracy at the State and at the national level
was being undermined in so many ways by political opportunism".
Adopting an amendment to the State's Constitution that "would
further deprive many Alaskans of their civil rights and equal
protection is unjust and contrary" to the "ideals of democracy".
Women, Blacks, Jews, and other groups in the United States were
"denied equality by laws determined by the majority". During her
lifetime she witnessed condemnations of many minorities.
Ms. Hood has advocated for civil rights on behalf of women, the
elderly, gay people, and persons with disabilities. "Putting
civil rights up for a popular vote is shameful … discrimination
based on self interest ignorance is all too common in this day
and age and has no place in Alaska." She urged the Committee to
hold Alaska to the highest democratic standards and prohibit
legislation such as this which would "deny rights and benefits
based on marital status".
9:30:40 AM
CLOVER SIMON testified via teleconference from an offnet
location in opposition to the resolution. All persons in
Alaska's diverse society should be respected and benefits should
be available to individuals' partners regardless of their sexual
orientation or marriage status.
9:31:39 AM
JAMES GRAY testified via teleconference from Anchorage in
opposition to the resolution. He and his partner's "loving and
caring" family are insulted by discriminatory views such as the
one being furthered in this resolution.
9:32:19 AM
FRED TRABER, Public Employee Retirement System Retiree,
testified via teleconference from Anchorage in opposition to the
resolution. He applauded the actions taken by Ross Anderson, the
mayor of Salt Lake City, Utah, who, shortly after taking office,
had "issued a non-discrimination executive order" which was
followed by another executive order. These orders served to
extend "benefits to the both unmarried and married city
employees".
Mr. Traber summarized that "on one hand we have an enlightened
mayor of a notoriously religious city who recognized the need
for same sex benefits and created those benefits with a simple
stroke of a pen. Here we are in a notoriously independent and
free thinking state debating whether or not you legislators
should legislate additional discrimination toward a small group
of" people. He urged the Committee not to pass the resolution
from Committee.
9:34:59 AM
Senator Bunde understood that Version "G" changed the bill
"significantly and would allow mutually beneficiary partnerships
or same sex partnerships to receive benefits from their
employers". To that point, he asked whether Mr. Traber had
reviewed Version "G", and if so, whether he maintained his
objection.
Mr. Traber responded "yes".
9:35:43 AM
MARY KEHRHAHN-STAR testified via teleconference from Fairbanks
against the resolution. Legislators should keep their personal
beliefs separate from "the big picture". While the people
targeted by this resolution might be same sex couples, they are
also law abiding hard working Alaskans who pay taxes and are
neighbors and co-workers. Adopting this resolution "would be out
and out discrimination". This action would be contrary to the
essence of Alaska. Serious consideration must be given to this
issue.
9:36:51 AM
VICTORIA SCHLERGER testified via teleconference from Fairbanks
in opposition to the resolution. She identified one of the
prominent questions asked by "the wide spectrum of religious and
political group" family members at a recent multi-state Parents,
Families, and Friends of Lesbians and Gays (PFLAG) conference
she attended as being "why are our children being treated
differently?" A vote in support of this legislation would be
akin to saying "I want to discriminate against" gay and lesbian
people. She urged the Committee to vote no on the resolution.
9:37:57 AM
MARJORIE COLE, Chair, Call to Action Alaska, testified via
teleconference from Fairbanks. The organization, which is
primarily comprised of Christians, sent a letter [copy not
provided] on February 19, 2006 to legislators which expressed
concern about the discriminatory nature of this resolution. The
State's Constitution "was not meant to limit human rights or
divide the people". The discrimination in the resolution was
based on outdated fears; "most Americans have moved toward
tolerance and acceptance of the approximate ten percent of
population born to homosexual orientation". During the debate of
a similar proposal in the state of Washington, a legislator
decried "that the heart does not choose who to love". Alaska
should be at the forefront of human rights. The language in SJR
20 is "extremely vague and if applied literally would make life
intolerable for many people. What are these benefit
obligations?" She asked whether they would include the right to
visit a loved one in the hospital, to execute a loved one's
will, or to raise their children. Homosexual people are family
people with morals. She requested the Committee not support this
discriminatory legislation.
9:39:54 AM
KEVIN DIAMOND, Student, Juneau Douglas High School, spoke in
opposition to the resolution as it would be an unconstitutional
violation of people's "basic human rights to equal protection
under the law". The financial impact to the State incurred in
providing benefits to gay and lesbian couples would be minimal.
He was concerned about how furthering this resolution would
affect himself and his partner in the future.
9:41:42 AM
LIN DAVIS stated that the language in Version "G" was still
"vague and problematic" and thus, had not diminished her
opposition to the resolution. It would not provide her and her
partner of 18 years "the equal protection that we deserve".
Unfortunately, in her job assisting people in finding
employment, she has become aware of numerous discriminatory
actions people have experienced. She disclosed she was a
plaintiff in the 2005 ACLU v. State & Municipality of Anchorage
Marriage Amendment case because she was concerned about her
partner who is nine years her junior. She wanted her to receive
"all the benefits that the people who work in the offices next
to me automatically get when they get married". Her community is
strengthened when people like her and her partner have access
"to the strongest financial base possible"; conversely, neither
a community nor a family would benefit by denying people "that
safety net" of health, death, or dental benefits. She has worked
hard at her job and is simply seeking "to receive the same pay
and benefits" as co-workers.
9:44:13 AM
STEPHEN GINGRICH of Eagle River testified via teleconference
from Anchorage and stressed this resolution would harm rather
than benefit people. The State's Supreme Court ruling on the
2005 lawsuit was conducted with "professionalism" and the
justices "rose above personal prejudices to do what was right.
Their decision harmed no one. This bill panders to bigotry" and
would violate many good government principles particularly that,
in a democracy, "a prejudice majority should not have the right
to deny equal rights to a minority". Providing equal pay for
equal work and providing medical coverage and survivor benefits
to children as well as spouses is the responsibility of good
government. Discriminatory actions such as the State's 1998
Constitutional amendment which specified marriage to be a union
between one man and one woman would one day be ruled
unconstitutional. The University of Alaska's policy of equal
treatment to all employees has been in effect for a decade. It
is a harmless policy. "Popular prejudice is diminishing." The
supporters of this bill would be placing "themselves on the
wrong side of history in the same place as the legislators of
the former slave states who after the Civil War enacted the Jim
Crowe laws. This is a Jim Crowe law."
9:45:46 AM
Senator Bunde asked whether the Marriage Amendment had ever been
challenged as being unconstitutional.
9:46:16 AM
Senator Seekins clarified that the "amendment has not been
challenged" as unconstitutional. While he was uncertain as to
whether similar language adopted by other states had been
challenged, he was certain any such challenge had not prevailed.
9:47:17 AM
Co-Chair Green invited Senator Seekins to join the Committee at
the table in order to respond to concerns raised by testifiers.
Continuing, she asked whether Version "G" could be viewed as
discriminatory, as argued by testifiers.
9:47:38 AM
Senator Seekins did not view the language in Version "G" as
discriminatory against individuals. It is correct that "people
can't get married" to their mother, brother or sister, first
cousin, or "someone of the same sex". Therefore, "if our laws
are discriminatory", they are uniformly "discriminatory to all
of those particular combinations". Thus, it is difficult to
understand how including the language specified in Version "G"
in the State's Constitution could be viewed as discriminatory;
specifically as the provision specifying marriage as a union
between one man and one woman already exists in the State's
Constitution and has not been challenged in Court.
9:49:00 AM
KEVIN CLARKSON, Attorney, Brena, Bell & Clarkson, P.C.,
testified via teleconference from an offnet location and
communicated that his firm was retained by the Legislature to
provide legal advice on this legislation. He observed that the
majority of the testimony presented was to the previous version
of this resolution rather than to Version "G".
Mr. Clarkson presented that Version "G" would "return this issue
to the democratic process". Version "G" "would allow either a
legislative branch of government or an administrative branch of
government to extent benefits to its employees, similar to the
benefits provided to a married employee for their spouse. While
the University of Alaska's policy which "extended benefits to
domestic partnership type relationships" for the last ten years
could have been impacted by the previous version of the
resolution, it would not be impacted by Version "G". "The only
entity" that Version "G" "would prohibit from extending these
benefits would be the Court because it simply says that the
Constitution doesn't require it". The proposed language "would
allow the democratic process to operate", as it would make it
permissible for benefits to be extended to mutual beneficiary
relationships.
Mr. Clarkson responded to Senator Bunde's question regarding
litigation on marriage amendments in the country: 19 states have
adopted "marriage defining or marriage benefit defining
amendments" and 12 more are considering such action. Of the ones
adopted, the only constitutional challenge was filed in federal
court in regards to a Nebraska amendment. In that case, the
"federal judge issued an opinion that he thought that that
particular amendment somehow deprived gay and lesbian people
access to the democratic process. That opinion has been appealed
by the State of Nebraska…" Legal scholars specializing in this
type of issue expect that federal ruling "to be soundly
reversed".
Mr. Clarkson verified that Alaska's Marriage Amendment has never
been challenged as being unconstitutional.
9:52:22 AM
Senator Bunde remarked therefore that the "current unchallenged
Alaska Constitution says that marriage is one man and one
woman."
Mr. Clarkson affirmed.
9:52:52 AM
Senator Bunde acknowledged those who philosophically prefer "the
original version of SJR 20, which would have prevented domestic
partnerships or mutually beneficial relationships..."
Continuing, he asked how the adoption of Version "G", which
would allow extending benefits to those in mutual beneficial
relationships, would affect current law considering that the
Constitution currently specifies that "gay marriage is
prohibited".
Mr. Clarkson limited his response to the legal impacts rather
than to any political impacts which might result by the adoption
of Version "G". Version "G" would "undo the Alaska Supreme Court
decision because that was the judicial extension of benefits by
the Court under the logic that the Constitution of Alaska
required those benefits to be extended." Adoption of Version "G"
would say "no, the judiciary on this particular issue should not
be getting out ahead of the people of Alaska …. It would put the
issue back into the democratic process because across the
country when marriage and marriage related amendments get
presented to the people" those amendments pass by overwhelmingly
margins. The people of the country do not want the courts to
make decisions on these types of issues.
9:55:46 AM
Senator Bunde discerned therefore that this resolution would
further the "separation of powers". The message to the courts
would be that this is a legislative and public decision to make
rather than a judicial issue. The basic law would not change
regardless of whether the resolution was adopted.
Mr. Clarkson clarified that SJR 20 would change the ACLU v.
State & Municipality of Anchorage court decision which specified
that "the Alaska Constitution mandates that these benefits be
extended by all public employers".
Senator Bunde acknowledged. The adoption of this resolution
would make the extension of benefits by various entities of the
State permissive rather than required.
Mr. Clarkson affirmed.
9:56:49 AM
Senator Olson inquired to the number of states banning gay
marriage, and the related benefit language of those laws.
Mr. Clarkson communicated that 19 states, including Alaska,
currently have marriage amendments. Of those, "seven include
language that addresses marriage related benefits". Some
prohibit extending benefits to people not in a "man and woman"
marriage relationship, and some contain permissive language
similar to that contained in this resolution. Marriage related
amendments would be on 12 other states' election ballots this
November. Were it adopted, this resolution would also be on the
November general election ballot. Some of the benefit language
of the 12 other ballot measures would be similar to that
proposed in Version "G".
9:58:29 AM
Senator Olson asked the reason this benefit was not considered
one of employment rather than one of marriage.
Mr. Clarkson replied that historically, the matter has been "a
benefit of employment that is extended because of the marriage
relationship".
AT EASE 9:59:37 AM / 10:01:00 AM
10:01:40 AM
MARGOT KNUTH, former State employee, observed that people
participating in this hearing were "disadvantaged" as copies of
Version "G" were unavailable.
Co-Chair Green apologized and ordered copies of Version "G" to
be distributed.
Ms. Knuth voiced concern regarding the possible legal effects of
Version "G". She deemed the impacts to be not "nearly as clear"
as professed by Mr. Clarkson. Her testimony was as follows.
It says that no provision in this Constitution shall be
construed to require that marriage or the legal incidence
of marriage be construed on a union other than the union of
a man and woman and as pointed out by Senator Olson, there
is a distinction between what are the legal incidence of
marriage and what are the legal incidence of employment.
And that is what the Alaska Supreme Court was addressing in
the ACLU case. I don't know that this new language impacts
the Alaska Supreme Court decision at all. To the extent
that this language is meant to accomplish something, I'm
not sure what that is. It is ambiguous, it is unclear and I
think an extremely good argument can be made that it does
not impact the decision and I've heard a number of people
that have said that the problem that we're trying to
address is judicial activism. If you are going to address
judicial activism, you need to be as clear as you can.
Otherwise, all you're doing is inviting further litigation.
I also think that April 28th is late in the [legislative]
session to try to develop a clear, helpful Constitutional
amendment. Constitutional amendments are something that
should happen very, very rarely, and for a compelling
reason. And if we're hearing that this is not supposed to
have a significant impact on the State of Alaska, legally
speaking, why are we doing it? If it is supposed to have
significant legal impact what is that impact? Members of
the Committee, I would like to suggest that what's really
wrong with this resolution and with the amendment is that
it's divisive and it will divide this State once again.
It's a topic that is painful to people and it's within the
control of this Committee to not let it go forward. And I
just believe that what we want is a unified Alaska. We have
enough issues like oil and gas taxes that we need to be
rallying around and that splintering us and making us focus
on what we don't like about each other is not the right
direction to go. I thank you for your consideration and I
thank you especially for your compassion.
10:05:03 AM
Senator Bunde voiced his appreciation for the legal advice Ms.
Knuth had provided to legislators when she worked for the State.
As indicated by his questions to Mr. Clarkson, he is confused
about what this resolution would accomplish. To garner further
insight as to the affect of Version "G" he had hoped a supporter
of the original version of the resolution would testify.
Continuing, he asked Ms. Knuth whether she agreed with Mr.
Clarkson's view that the two major things that this initiative
would accomplish would be placing this issue back within "the
legislative arena rather than the judicial" arena, making these
mutually beneficial relationships "permissive for local entities
rather than mandatory".
10:06:25 AM
Ms. Knuth disagreed with both points. Responding to the second
question, she made the following statement.
"There is nothing in this language that addresses domestic
partnerships or mutually beneficial relationships at all.
This is completely silent about that, and so it can't
support those or allow those in its silence. At most you're
saying that those are allowed under the Alaska Constitution
already and that they would continue to be allowed. But
there's nothing in the language that says no other union is
similarly situated to a marriage; no provision in this
Constitution shall be construed to require something.
There's nothing in that language at all that's helpful to
domestic relationships or partnerships.
Ms. Knuth continued as follows.
On the first question, counsel had said that the affect of
this amendment would be to change the Alaska Supreme
Court's ruling in the ACLU case. I'm not sure that that's
true either because the Alaska Supreme Court was not
interpreting marriage and the benefits of marriage; it was
interpreting employment and the benefits of employment.
And, as an example, I'm a Tier I State of Alaska employee.
I paid as much of a contribution for benefits the entire
time that I worked for the State of Alaska and if I have a
same sex partner, why should I not have the right to buy
the same insurance for that person, or as a Tier I to have
it provided by the State of Alaska, as somebody who's
dependent or partner is a legally recognized marriage.
Senator Seekins was trying to lump marriages that are
illegal; to wed cousins within a degree of consanguinity
with gay and lesbian marriages. The United States Supreme
Court has said that you cannot do that. There is a
distinction. The U.S. Supreme Court recognizes the rights
of states to prohibit certain marriages…and to say that
this is illegal conduct. They have ruled that states cannot
criminalize gay and lesbian relationships. It cannot be
criminalized. And the fact that it cannot be criminalized
is what put the Alaska Supreme Court in the bind in the
ACLU case. You have said that I'm not going to grant you
the same civil recognition for same sex marriage, but by
federal Constitution, you cannot criminalize it. And so the
Alaska Supreme Court was saying in that case, what I have
to do is say for this class of people who you are
prohibiting from the civil rights of marriage, but which is
conduct that is constitutionally permissible, now that has
to be treated equally. And that's going to remain true
after this amendment to SJR 20. It's a complicated issue."
10:09:33 AM
Senator Bunde appreciated the information Ms. Knuth provided.
10:10:28 AM
MARSHA BUCK, Representative, Parents Families and Friends of
Lesbians and Gays (PFLAG) - Juneau, voiced being "equally as
confused" as Committee members. She also appreciated Margo
Knuth's testimony. As a public citizen, she would have
appreciated having advance notice that a committee substitute
would be offered today as many people's testimony, including
hers, was based on the previous version of the resolution. As a
consequence, that testimony might be inappropriate to the
discussion. Therefore, she would speak to the issue at hand
contemporaneously.
Ms. Buck spoke to her initial opposition of the resolution: gay
and lesbian sons and daughters and bisexual citizens were being
marginalized today in the same way that groups of people even in
Biblical times "have been marginalized throughout history".
Provisions in the original resolution "definitely marginalized"
her lesbian daughter as well as her daughter's children as it
would have denied them access to the same rights and benefits.
This was an affront to her Christian beliefs.
Ms. Buck stated that, like the original version, Version "G"
might, upon review, also "feel discriminatory". There is concern
that making the provision of benefits permissive rather than
mandatory for the State would also marginalize gays and
lesbians; it would "protect the rights of the minority". "What
if there were a legislature that didn't look at protecting the
rights of the minority but looked only at taking a vote out to
the majority, since we know the majority doesn't always protect
the rights of a minority." The rights of people such as her
daughter might not be protected were the issue put to a vote of
the people. The benefits of State employees should be available
to her daughter and her grandchildren. This is an important
issue. Committee members should take note of events that
occurred in the past.
10:14:20 AM
REVERAND MICHAEL BURKE, Rector, St. Mary's Episcopal Church,
testified via teleconference from Anchorage in opposition to the
Resolution. He is a husband and father and his family would
represent "one of those traditional families people talk about
upholding and strengthening". "The whole issue of gay and
lesbian people and their partnerships is far from settled in our
faith communities." In his Christian denomination, for example,
these lifelong monogamous partnerships are called blessings of
holy union and the discussion of what the Hebrew and Christian
scriptures say about human sexuality is a lively discussion and
it's far from settled.
Rev. Burke reminded Members that a generation or so ago, the
place of people who were divorced or remarried were of a similar
uncertain status in our faith communities and in society. "The
argument back then is the same that I'm hearing among folks
today. That we need to uphold traditional marriage, strengthen
families, prevent the erosion of what was called public
morality, but in both churches and civil law, we recognize, I
think, the complexity of human relationships. That's been
reflected in changes in the law and in the moral judgments we
make about people who are divorced or remarried. Make no
mistake, I believe there are threats to the family unit today
that are real, that are substantial, but those threats do not
come from long-term stable monogamous lifelong loving
relationships whether they're straight or whether they are gay
or lesbian. Those are the kinds of relationships that strengthen
our family and our civil societies.
Rev. Burke continued, "So, to close, as an Alaskan, as a father,
as a husband, as a Christian minister, as one who has two young
kids that are going to grow up in this great State, I ask that
you reject" this resolution and "unequivocally take a stand for
the full human rights and respect in human dignity of all
Alaskans", regardless of what actions are taken in other states.
"Join me in being proud to be an Alaskan where basic civil
rights are never called special rights".
10:16:54 AM
FRANCIS MANYOKY, Student, University of Alaska Anchorage,
testified via teleconference from Anchorage in opposition to SJR
20 as it would deprive the State and its citizens of social and
economic benefits. Those supporting the bill tout it "to protect
the traditional marriage" by providing benefits only to married
couples. However, federal law has recognized "homosexuality as
an acceptable lifestyle, which means it's not immoral or
unethical". Thus, denying homosexuals the right to marry has
resulted in "an acceptable, ethical, and moral minority" who are
denied the right to joint health benefits.
Mr. Manyoky stated that the question would be whether this
resolution might encourage homosexual people "to conform to the
viewpoint of those who propose this bill and have fraudulent
heterosexual marriages in order to receive these benefits or do
those who propose this bill expect to discourage homosexuals
from seeking employment" with the State; "either way the bill
would have a negative social and economic impact" on the State.
Were this bill to encourage heterosexual marriages among
homosexual Alaska State employees "it would mock the very
sacredness of marriage those who propose this bill claim to be
protecting". On the other hand, "were this bill to discourage
homosexuals from working for the State, it would be unethically
discriminative towards an acceptable minority but it would also
economically disadvantage the State as it would discourage many
exceptionally qualified applicants from applying for State
employment." Those people would instead seek employment with
more accepting entities such as Wells Fargo Bank and Providence
Hospital. The Alaska Native Hospital would loose "desperately
needed" skilled nurses and doctors. "Since the professional
skills of a person are relevant to his or her income," and being
that the national average income of homosexuals is approximately
$20,000 higher than the income of heterosexuals according to
information on the Family Research Council website, this would
indicate that "there would be highly valuable professional"
homosexuals who would be discouraged from working for the State.
He shared that Anchorage, with an index rating of 100, is on par
with the national average number of homosexual relations;
Juneau's index is 140. These numbers would underscore the
negative social and economic impacts that passage of this bill
would incur to the State.
Co-Chair Green stated that in order to provide sufficient time
for public testimony on this bill, the two minute time limit
would be strictly enforced.
10:22:02 AM
Senator Bunde noted that the bill's sponsor had distributed a
three-page letter [copy on file] from pastors and churches
belonging to the Alaska Family Council, in support of SJR 20.
His question however, was to which version of the bill the
letter was written. If it was to the original bill, he wondered
whether that support would continue to apply to Version "G". He
also noted that his pastor was not one of the letter signers.
10:23:00 AM
KAY ROLLISON testified via teleconference from Anchorage in
opposition to the resolution. She could not understand how the
Committee could make a decision on this "extremely important"
issue in a short period of time when it took the founders of the
State's Constitution several months to develop that document.
Their educated and well-researched effort produced such things
as excellent resource development and equal protection clauses.
They endeavored to establish a government that would protect
citizens' equality rather than "second guessing it by social
norms of the day". In days gone by, racial marriages were
unacceptable. However that has changed as the result of a change
in social norms rather than a change in any type of "legal
contractual provision". A lively debate is occurring in this
country. She is proud to be an Alaskan as this State's
Constitution was well founded. The Committee had insufficient
time in which to address such an important issue.
Co-Chair Green announced that individuals who had testified
previously to the earlier version of this resolution would not
be permitted to testify again due to time constraints.
10:25:00 AM
CRYSTAL SCHRIER, Mother, Student at the University of
Alaska/Fairbanks, and Inactive Reserve Member of the United
States Army National Guard testified via teleconference from
Fairbanks. "As a soldier", she took the Constitutions of Alaska
and the country "very seriously". She took exception to putting
forth "an amendment that discriminates and that really doesn't
appear to have a purpose based on the testimony" presented.
Contrary to the bill sponsor's statement, this resolution would
not allow mutual beneficiary contracts such as those currently
offered by the University of Alaska, as the experiences of the
states of Oregon, Kansas and Nebraska, which have adopted
similar language, would indicate that the language could be used
"to deny benefits for same sex partners" and common law
partners.
Ms. Schrier stressed that "the United States Supreme Court has
decided that gay/lesbian employees and citizens should not be
discriminated against, and this resolution, in its current form,
says that it is recognizing marriage as the union of a man and a
woman. I don't believe that this is an issue of marriage … Civil
partnerships are a matter of giving civil rights to all
citizens, all taxpayers, all workers". Soldiers are risking
their lives to protect the Constitution that the Committee is
thinking about changing. This "very very serious matter" should
not be acted upon without sufficient public input. The civil
rights of all Americans must be protected. She urged the
Committee to oppose the legislation.
10:27:31 AM
JEREMY SMITH testified via teleconference from Fairbanks to urge
the Committee to reject this resolution.
10:27:46 AM
MATTHEW WIEDERHOLT testified via teleconference from Fairbanks.
He was confused about the purpose of bill. There is no danger in
allowing same sex marriages and the fact that that issue is not
being addressed adds to "the ambiguity" of the bill. In his
opinion, if people are worried about such things as perversions,
"the institution of marriage has been perverted since the very
beginning when people began getting divorces and making
prenuptial agreements and getting married for reasons that had
nothing to do with love and raising a family… It is further
perverted by us discussing this issue and spending further money
on it." He agreed with the comments made by Reverend Burke:
"there are way more" important issues to address than this. He
was opposed to this bill.
10:29:13 AM
CHERYL HUMME testified via teleconference from Fairbanks against
the bill. Instead of working towards "fairness, equal treatment,
and equal rights", this resolution would further discrimination
of people the supporters of the bill "consider outside the
norm". Instead of expanding health care to Alaskans, this
proposal would "narrow and restrict health care". Her sister is
married to a man who has had extramarital relations,
disrespected her numerous times and "has taken advantage of her
financially". However, because they are married, they are
entitled to better rights than those provided to her brother who
is in a long-term, financially stable heterosexual relationship
but not married.
Ms. Humme, who was also "a strong supporter of gay rights",
stated that "the essence of this resolution is harmful to all
Alaskans". She was "skeptical" of the committee substitute,
particularly to the vagueness of its language. Supporters of
this proposed amendment bring the issue of same sex unions to
the forefront because this issue "can stir up indignation".
"This proposal is against any individual who does not conform to
the mandate of" its supporters. She has heard repeatedly that
"people who support this amendment are good people but it is
simply a moral issue for them". She has come to "loathe the use
of the term 'morals' because it is usually a codeword for
judgment". She could not fathom how people "could talk about
morals and still be willing to work to destroy families that are
simply different from your own". She urged the Committee not to
support this resolution. She also did not appreciate Senator
Seekins's comparing incestuous couples to same sex couples.
10:31:30 AM
AMY PAGE voiced her opposition to the resolution. The democratic
process should not be utilized in this manner, as this is not an
issue that the "wider population" should decide. The individual
civil rights of minorities are protected in both the United
States and Alaska Constitutions. Allowing the wider population
to vote on the Marriage Amendment allowed it to be added to the
State's Constitution. Continuing with this resolution in that
manner would be deplorable.
Ms. Page viewed the language in Version "G" as vague in regards
to mutual beneficiary relationships. "It would allow for any
kind of interpretation." Efforts should be made to ensure that
all people could be treated equally under the law, in regards to
employer based health care benefits and numerous other rights.
10:33:56 AM
JUDY CRONDAHL addressed "the poorly drafted and ambiguous
amendment" language in both the original version of the bill and
Version "G". While the passage of this legislation would not
incur any financial impact to the public at large, the State
would incur expenses due to the years of litigation that would
result. "Conversely, failure to pass this resolution would help
many people to obtain health insurance and reduce personal
medical expenses at no additional cost to the State." Members of
the legislature, especially members "of this Committee would be
irresponsible to approve a resolution "that would place an
additional financial burden on the Department of Law and serve
no public function". Furthermore, it would be contrary to the
teachings of Jesus who promoted loving one's neighbors and
helping the most vulnerable among us. This would, in today's
society, include those who have no health insurance.
10:35:17 AM
EVE DILLINGHAM, Representative, University of Alaska Southeast
Faculty Senate, read into the record the organization's
resolution [copy on file], dated March 24, 2006. The resolution
supported the University of Alaska Board of Regents' policy of
non-discrimination and commended its policy of providing
"financially interdependent partner (FIPs) benefits".
Ms. Dillingham also agreed with the remarks of Margo Knuth and
Reverend Burke.
10:37:58 AM
DANIEL COLLISON, State of Alaska Employee, spoke in opposition
to SJR 20. This resolution would, on a "practical level", impact
his family. For example, had his partner who is also a State of
Alaska employee been able to submit his recent $1,200 dental
work claim as a joint benefit coverage, his out of pocket
expense would have been significantly reduced. Version "G" would
"allow public entities to discriminate against gays and
lesbians". The citizens of the State should have the right to
vote on public policy matters such as sales taxes; however, "in
a democracy, neither the public nor the legislature should have
the right to vote" on minority or civil rights issues. This is
what would be allowed were this resolution to pass.
10:40:07 AM
KEN SMITH, State of Alaska Employee, stated his opposition to
SJR 20. The intent of both the original resolution language and
that of Version "G" would be "to deny benefits to partners of
same sex couples".
10:40:47 AM
PAULA TERREL appreciated hearing Senator Olson's earlier remark
that this discussion "is not about marriage, it is about
employment rights and benefits". She urged legislators to focus
on that issue because that is the issue. That was what the
Alaska Supreme Court ruling addressed. She understood that
Version "G" would make extending benefits "permissive". In other
words, "it would allow, for example, the legislature to either
grant or not grant employment benefits to same sex partners". In
her opinion, this would "open up a can of worms". If the State
or the legislature refused to grant benefits, "it would come
right smack back in front of the courts because again it is
discriminatory". The Alaska Supreme Court could not be told how
to interpret the State Constitution. Alaska's Constitution is
"very strong" on rights of individuals and is not
discriminatory. It should not be compared to the constitutions
of other states. In summary, this resolution would create more
problems. She was opposed to SJR 20.
10:42:54 AM
Senator Dyson asked Ms. Terrel to share her thoughts as to what
should constitute "a couple or a family, and therefore who
should get the benefits of an employee".
Ms. Terrel was unsure how to respond, as even "a committed
relationship" in a marriage could end in divorce. She
communicated however, that the University of Alaska has
specified guidelines for its benefits determination.
Senator Dyson agreed with Ms. Terrel's use of the words
"committed relationship". However, the fact that he is "really
committed to a quite a number of people" would not "make us a
couple". In addition to being a committed relationship, some
states require there be "an intimate relationship, which is code
word for sexual". Were the State to expand beyond the formalized
process that we call marriage, it would encounter a slew "of
subjective things". Therefore, he asked Ms. Terrel whether a
couple must have an intimate relationship as well as a committed
relationship.
Ms. Terrel responded that identifying "the standards" as to who
would qualify for health care and other benefits would be
"overstepping" her expertise. However, more thought should be
given to SJR 20 as it "is really discriminatory". Careful
consideration should be taken in order to avoid creating "a lot
of pain and … legal problems".
10:45:29 AM
GLENN GRAY spoke in opposition to Version "G" "because it would
allow discrimination". When his Irish ancestors came to the
United States centuries ago, they were discriminated against.
When his mother married his father in 1934, "the family was
scandalized because he was an Italian American". While his
father "dealt with that" by changing the family name to "Gray",
such an easy solution would not be available to people dealing
with this issue. The "live and let live attitude" he enjoyed
when he moved to the State in 1976 has changed over time. Now a
"vocal minority" is telling us "that it's okay to be different
as long as you're just like them". He asked the Committee to
oppose the resolution. The committee substitute is confusing
and, rather than being permissive as argued, it would be
permissive in that it would allow and promote discrimination.
10:47:10 AM
STEVE HAMILTON, local businessman, stated "that this is the
first time in all of my 54 years that I have found it necessary
to tell anyone that I am gay. I am disappointed that you are
making an attempt to discriminate against me simply because of
my sexuality." His sexuality "has never been an issue" in either
his work or family life. He grew up in the Midwest with
"ultraconservative" parents who loved him "unconditionally".
"God created me … and loves me for who I am. God simply created
me a little different than some of you. The same as we have no
choice in our physical makeup," either in the color of our skin,
the color of our eyes or our statute, "God created us the way he
chose. Please have the respect for all of us, and let this bill
die. Thank you."
10:48:51 AM
KAREN WOOD, accompanied by her and her partner's six year old
daughter, Willa, informed the Committee that she and her partner
were two of the plaintiffs in the ACLU v. State & Municipality
of Anchorage lawsuit which prompted this resolution. She and her
partner joined the lawsuit because "we believed we were being
discriminated against by not being able to cover one another
under our respective health insurance policies". They have spent
tens of thousands of dollars out of pocket "that our married co-
workers and their spouses did not have to spend. This affects
our family" financially and "emotionally as it is yet another
message to us that we are not equal or as good as our straight
married co-workers."
Ms. Woods revealed that she had wanted to stay home a few years
with Willa after she was adopted because they believed it was
important for a child to have that time with a parent. However,
because she had medical issues and could not be covered under
her partner's health insurance, she could not stay home with
Willa. This situation affected her and her partner's life as
well as Willa's. Were this resolution adopted and something to
happen to either her or her partner, the surviving parent could
not "access benefits or the deceased partner's health benefits".
This would place the family at financial risk.
Ms. Woods continued, stating "By writing discrimination into
Alaska's Constitution, you would not only be discriminating
against us as gay and lesbian people, you would be
discriminating against our children". Parents want to provide
their children good lives. Gay and lesbians are no exception.
"Why should their children be offered less than any child in the
State whose parents are married? Why shouldn't she be provided
the same financial security and economic options as those
children? There are thousands of children who live in families
like ours in the State. Please do what you know in your hearts
is right, to allow our kids to be provided for as equals to the
other children in our State." She urged the Committee to "do the
right thing".
10:52:42 AM
LAURA MINNE opposed both the original version of the bill and
Version "G". The time is now for Alaska to respect its
Constitution and the people it protects. Amending the State's
Constitution further "to remove, rather than to enhance,
protections is undeniably un-American". Families and schools
endeavor to teach children to welcome diversity, "to accept
differences in others, and to be willing to take a stand for
what we believe is right". As parents of a ten-year old boy, she
and husband work diligently to teach him values including
fairness, tolerance and acceptance of all types of people and
families, "both conventional and unconventional". Children are
not borne with discriminating thoughts or prejudices; they learn
it from adults in their lives. Parents and "leaders like you
have the responsibly to all our children, to all our families,
to begin, as a society, to walk this talk of embracing diversity
through the demonstration of equality and justice for all". She
pleaded with the Committee not to advance legislation "that
would undeniably discriminate against a minority group of
citizens who have the same commitments to their families, their
churches, their relationships, their communities, and to this
state as you do. Equal protection of the law means everyone. I
ask that you take a stand for what is truth and just and do not
allow this proposed amendment to go any further."
10:55:13 AM
Senator Dyson asked whether Ms. Minne considered federal
congressional actions in the 1880s that refused a state that
condoned polygamy to enter the union, to be "improper or
discriminatory".
Ms. Minne could not comment, as the different philosophical
reasoning that accompanied that issue made it difficult to
compare to the issue before the Committee. SJR 20 addressed the
issue of committed relationships.
Senator Dyson clarified that, rather than asking for a
comparison, his question was whether she considered it improper
for the government to decide that committed relationships would
only include two people.
Ms. Minne could not comment.
There being no further testifiers, Co-Chair Green announced that
public testimony on SJR 20 was concluded.
AT EASE 10:56:14 AM / 10:56:37 AM
Co-Chair Green reminded that the Committee would reconvene later
in the day to address the other bills on today's agenda.
Co-Chair Green removed her objection to the adoption of the
Version "G" committee substitute.
Co-Chair Wilken moved to report the committee substitute from
Committee with individual recommendations and accompanying
fiscal note.
Senator Bunde objected. Furthering this legislation would not
accomplish anything.
Co-Chair Green informed the Committee that the three page letter
from church pastors, which had been distributed earlier, was
written to the original version of the bill. While that version
would be their preference, they would extend their support to
the committee substitute.
A roll call was taken on the motion to report the bill from
Committee.
IN FAVOR: Senator Dyson, Co-Chair Wilken, Senator Olson, and Co-
Chair Green
OPPOSED: Senator Stedman, Senator Bunde, and Senator Hoffman
The motion PASSED (4-3)
SRJ 20 (FIN) was REPORTED from Committee with previous $1,500
fiscal note #1 from the Division of Elections, Office of the
Lieutenant Governor.
RECESS 10:58:28 AM / 3:09:29 PM
CS FOR SENATE BILL NO. 272(L&C)
"An Act relating to mortgage lenders, mortgage brokers,
state agents who collect program administration fees, and
other persons who engage in activities relating to mortgage
lending; relating to mortgage loan activities; relating to
fees for recorded mortgage loan instruments; and providing
for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Green moved to adopt CS SB 272 24-LS1644\U, as the
working document, and objected to receive an explanation.
3:09:59 PM
AMY SEITZ, Staff to Senator Tom Wagoner, the bill's sponsor,
informed the Committee this bill would establish mortgage
licensing practices. Alaska is the only state that does not have
this "consumer protection" feature in law, and as a result the
Alaska Division of Banking and Securities does not have the
authority to investigate complaints received. The Division
receives approximately 20 legitimate complaints each week, in
addition to 50 phone calls regarding questionable lending
practices. Five years worth of efforts have culminated in the
current "U" version of the bill.
Co-Chair Green asked what interests may lead a person to support
or oppose this bill.
3:12:00 PM
Ms. Seitz informed that support is the result of recognition
that consumers need protection. The industry and the State
support the bill for that reason. The opposition comes from
people who would rather license the loan originators.
Co-Chair Green asked where she might find a loan originator.
Ms. Seitz replied that an originator would meet with an
applicant "face-to-face" to enter into a loan agreement.
Ms. Seitz explained that the proposed legislation would protect
consumers from any problems caused by the originator, as the
language applies to employees of a licensed business. Opposition
to the bill is based on "personal preference" rather than issues
of protection.
3:13:42 PM
Co-Chair Green asked regarding certification or license
requirements.
Ms. Seitz responded that no licensure requirements exist in the
State. Some groups are federally regulated, such as State banks.
Small residential mortgage companies, however, are not licensed.
Senator Olson understood the bill contained protections against
"predatory lenders", and asked how those provisions would affect
loans negotiated between private parties.
3:14:48 PM
MARK DAVIS, Director, Division of Banking & Securities,
Department of Commerce, Community and Economic Development
testified via teleconference from Anchorage, and responded that
under Sec. 06.60.020(1) added by Section 2 on page 2 lines 14
through 17 of the bill, a person who makes fewer than six
mortgage loans in a 12 month period would be exempt from the
licensing requirements.
Senator Olson acknowledged.
Mr. Davis continued that while the proposed legislation would
take two years to fully implement, it would allow the Division
to immediately require licensing of all new companies wishing to
enter the Alaska mortgage marketplace. He indicated that the
State's "strong housing market" had made it attractive to
mortgage lenders, and the ability to license those businesses as
they enter the marketplace would be beneficial to Alaska. State
banks are currently regulated by federal guidelines, but other
subsidiary mortgage companies operated by banks are not. This
legislation would create a "more even playing field". He urged
passage of the bill.
3:18:20 PM
Senator Olson asked how the regulations would apply to the self-
financed sale of a building.
3:18:55 PM
ROGER PRINCE, Department of Commerce, Community and Economic
Development, testified via teleconference from Anchorage that
that type of transaction would be exempt from this bill.
Senator Olson asked where the exemption was defined in the bill.
Mr. Prince located the language in Sec.06.60.990 (11)(A), added
by Section 2 on page 21 lines 25 through 30.
3:19:53 PM
Senator Dyson was "wary" of bills that require licensing, as he
considered them often an attempt by an established group to
control competition. He asked for assurance that this bill was
truly aimed at protecting consumers and not an attempt to
restrict access to other potential lenders.
3:20:51 PM
Co-Chair Wilken presided over the following portion of the
meeting.
Ms. Seitz relayed that larger entities are already regulated.
This bill would address the smaller mortgage lenders that are
not currently licensed.
3:21:34 PM
Mr. Davis referred to a "payday lending" bill that had been
passed the previous year. It was anticipated that that
regulatory bill would decrease competition in the field. The
opposite effect occurred, as 23 additional lenders entered the
marketplace and rates decreased. He concluded that the effect of
licensure was to "increase competition and increase the number
of members in the industry", and surmised the same results could
be expected in the field of mortgage lending. He stressed that
the Division would endeavor to ensure the burden of licensing
did not have detrimental effects on small businesses.
3:23:10 PM
Senator Dyson assumed that mortgage lending companies that chose
not to conduct business in Alaska did so due to the possibility
of "undercutting" by unreputable, unlicensed companies. He asked
for examples of such "horror stories" as indication of what this
legislation intended to prevent.
3:23:51 PM
Mr. Davis exampled one case currently under investigation in
which mortgage lending appeared to be used as a method of
laundering money. Another problem related to lack of oversight
is referred to as the "bait and switch" tactic, in which a
person is promised one rate by a mortgage broker, but at closing
are locked into a higher rate. Variations in disclosure letters
and "less than honest" prequalification letters also pose
potential fraud risks to the consumer. This bill would preserve
the Department of Law's ability to address these issues.
3:25:50 PM
DOUG ISAACSON, Past President, Alaska Association of Mortgage
Brokers, President, Gold Coast Mortgage, testified via
teleconference from Fairbanks, that this bill would encourage
accountability. He addressed the "bait and switch" issue and
explained that while some instances of higher interest rates at
closing are in fact due to dishonest or fraudulent claims, some
merely reflect changes in the market. If a person enters loan
negotiations without "locking" the discussed interest rate, it
is common for rates to fluctuate during the time it takes to
finalize a mortgage loan, which may result in a higher rate at
the time of closing. He understood language was developed to
address this.
Mr. Isaacson was concerned that the current "U" version of the
bill did not include "a person who is exempt under AS 06.60.020"
in the language of Sec. 06.60.420 Prohibited activities., as
added by Section 2 as the previous Labor & Commerce Committee
substitute Version "R" had. He suggested that language was
necessary to protect consumers in all types of mortgage
transactions, including those through an "exempt" entity. He
also contended that an exempt person should be required to file
for exemption with the State. He proposed the provision in Sec.
06.60.340 of Section 2 which required the Department to conduct
examinations of licensees every 36 months be modified to allow,
but not require, the examinations. He encouraged clarification
of Sec. 06.60.600(b) and recommended allowing the fee to be paid
by any party to the transaction.
3:30:39 PM
Co-Chair Green resumed Chair, and asked the location of the
proposed language change.
Mr. Isaacson stated the Alaska Association of Mortgage Brokers
support for the bill, and commented that if the fiscal note
indicated a profit from the licensing fees, the cost of audits
and regulations should correspondingly be reduced.
3:32:44 PM
GREG WILLIAMS, Regional Director of State Government Affairs,
American Financial Services Association (AFSA), testified via
teleconference from an offnet location in Denver, Colorado. He
informed that AFSA members are all supervised or regulated under
state and federal law, and engage in auto finance, personal
loans, and mortgage lending. He appreciated the efforts of the
Department and the Division of Banking, and would support the
bill as amended. He understood that several concerns AFSA had
with the original bill had been addressed through the committee
process.
3:37:29 PM
Co-Chair Green asked if Mr. Williams' concerns had been
addressed in the current "U" Version of the bill.
Ms. Seitz replied that an amendment had been sent to the
Legislative Affairs Agency, Division of Legal Research Services
to be drafted but had not yet been completed.
Co-Chair Green removed her objection to adopting Version "U".
Without further objection, Version "U" was ADOPTED as the
working document.
Amendment #1: This amendment deletes "Except for AS06.60.400 -
06.60.440", from Sec. 06.60.020 added by Section 2 on page 2,
line 14. The amended language reads, "Sec. 06.60.020.
Exemptions. This chapter does not apply to…"
In addition, this amendment deletes "a record of" from Sec.
06.60.090(4) added by Section 2 on page 6 line 22; deletes "a
conviction" and inserts "been convicted" in subparagraph (A) on
line 23; and deletes "an act, an omission, or a practice" and
inserts "committed an act, made an omission, or engaged in a
practice" in subparagraph (B) on line 26. The amended language
reads as follows.
(4) has, within the previous seven years,
(A) been convicted, including a conviction
based on a guilty plea or plea of nolo contendere, of
a crime, including fraud or another crime involving
personal dishonesty;
(B) committed an act, made an omission, or
engaged in a practice that constitutes a breach of a
fiduciary duty;
Furthermore, this amendment deletes the language of Sec.
06.60.090 (C) and (D) added by Section 2 on page 6, line 28,
through page 7, line 1 and inserts new language to read as
follows.
(C) had the person's participation in the
conduct of a business limited by an administrative act
of a federal or state agency, including the suspension
of a license for engaging in an occupation; or
(D) had a license for engaging in an
occupation revoked or terminated for cause by a
federal or state agency.
The amendment also inserts a new subsection to Sec. 06.60.120
added by Section 2 following line 18, page 8 to read as follows.
(i) While a license is inactive under this section,
the person holding the inactive license shall continue to
maintain records as required by AS 06.60.250 for the
business transactions of the person that occurred before
the license became inactive.
(j) While a license is inactive under this section,
the department may take action against the license, the
person holding the inactive license, or both under AS
06.60.300 - 06.60.360 and 06.60.500 - 06.60.540 for
noncompliance with this chapter before the license became
inactive or for noncompliance with this section while the
license is inactive.
(k) Except as otherwise provided in this section and
by regulations adopted by the department, the provisions of
this chapter do not apply to a person holding an inactive
license under this section.
Co-Chair Green moved for adoption and objected for an
explanation.
3:39:18 PM
Ms. Seitz explained that this amendment would address two issues
raised in a memorandum from Division of Legal and Research
Services, as well as make a technical deletion. The amendment
clarified additional grounds for denial of license as specified
in Sec. 06.60.090, added by Section 2. It also specified which
provisions would be applicable to an inactive license, requiring
the licensee to retain records for three years and providing the
Division the authority to investigate claims brought against the
licensee while they were active.
Co-Chair Green remarked that "this is a lot of new law".
3:41:23 PM
Without further objection, Amendment #1 was ADOPTED.
Co-Chair Green stated that Mr. Williams had proposed additional
language changes for the bill, which would be addressed after
completion of public testimony.
3:42:58 PM
LAURIE HOLT, Officer of Residential Lending, Mortgage
Operations, Alaska Housing Finance Corporation (AHFC),
Department of Revenue testified via teleconference from an
offnet location on behalf of AHFC. While she had not had an
opportunity to review the current committee substitute, AHFC was
supportive of the "concept" of the legislation. She urged
passage of the bill.
3:44:07 PM
Mr. Prince was available to answer questions.
3:44:48 PM
JOE BRAMMER, Alaska Association of Mortgage Brokers, testified
via teleconference from Anchorage in support of the intent of
this legislation. His Association had been working closely with
the Alaska Association of Mortgage Bankers and others to address
obstacles within the industry. Many members of the Alaska
Association of Mortgage Brokers are small businesses employing
only a few people. Alaska regulations have been detrimental to
these businesses; therefore, they support the proposed
legislation. He was concerned about the nine exemptions within
the bill. During a Senate Labor & Commerce Committee hearing, he
had proposed that a person must apply for and be granted
exemption. This provision is not currently contained in the
bill. He told of "chatter" within the industry indicating that
many mortgage brokers have been attempting to define themselves
as "exempt" based on the current language.
3:46:51 PM
JOHN MARTIN, testified via teleconference from Anchorage, and
referred to his written testimony [copy on file]. He informed
that his suggestions had not been incorporated into the current
committee substitute. He requested his submissions be included
in the bill. He stated that licensing is needed, and this bill
is "on the right track".
3:48:40 PM
KEN GAIN, Secretary/Treasurer, Independent Lenders of Alaska,
testified via teleconference from Anchorage, that the proposed
legislation is "not unduly burdensome" to small businesses, and
provides needed protection. He described the amendments as
appropriate, and noted that the bill is supported by three
regulated trade associations as well as by the Department.
3:49:57 PM
JOHN CARMAN, Past President, Alaska Mortgage Bankers
Association, testified via teleconference from Anchorage, that
he had been involved in advancing legislation of this type for
approximately five years. He noted the efforts and compromises
that have occurred to reach this position. No regulations
currently exist, and he offered anecdotal evidence that the lack
of regulations make mortgage lending attractive to untrustworthy
persons. He urged passage of the bill.
AT EASE 3:53:08 PM / 3:54:58 PM
Amendment #2: This conceptual amendment inserts "as defined in
15. U.S.C.A. 1602(a)" following "a mortgage loan"; deletes
"best" following "borrower's"; and inserts "may include, but are
not limited to" following "interest" in Sec. 06.60.430, added by
Section 2 on page 16, lines 20 through 24. The amended language
reads as follows.
Sec. 06.60.430. Certain refinancing prohibited. (a) A
mortgage broker may not refinance a mortgage loan as
defined in 15 U.S.C.A. 1602(aa) within 12 months after the
date the mortgage loan is originated by the lender or
broker, unless the refinancing is in the borrower's
interest.
(b) The factors to be considered when determining if a
mortgage is in the borrower's interest may include, but are
not limited to, whether
(1)…
This amendment also deletes "mortgage broker" where it appears
in Sec. 06.60.440 and makes necessary conforming changes;
deletes "30 days before a change occurs in the billing address
of the mortgage lender or mortgage broker"; inserts new language
following "writing" in subsection (c); and adds a new subsection
(d). The amended language reads as follows.
Sec. 06.60.440. Escrow accounts. (a) A mortgage lender
and a borrower may agree that the mortgage lender will keep
in an escrow account all money that the borrower is
required to pay to defray future taxes or insurance
premiums or for other lawful purposes. The escrow account
must be a trust account or another account that is
segregated from the other accounts of the mortgage lender.
The mortgage lender may not commingle the borrower's money
with the general funds of the mortgage lender.
(b) A mortgage lender may not require a borrower to
pay money into escrow to defray future taxes, to defray
insurance premiums, or for another purpose, in connection
with a subordinate mortgage loan, unless an escrow account
for that purpose is not being maintained for the mortgage
loan that is superior to the subordinate mortgage loan.
(c) A mortgage lender who is holding money in escrow
for insurance premiums shall notify the insurer in writing
within 30 days after the billing address of the mortgage
lender changes, or 60 days before the renewal date of the
insurance policy, whichever is later.
(d) A mortgage broker who accepts funds belonging to a
borrower in connection with a mortgage loan shall deposit
all those funds into a trust fund account maintained by the
broker in a bank or recognized depository in this state.
The mortgage broker may not commingle the borrower's money
with the general funds of the mortgage broker. All funds
deposited by the broker in a trust fund account shall be
maintained there until disbursed by the broker in
accordance with the instructions from the borrower.
Co-Chair Green moved the amendment and objected for explanation.
3:55:23 PM
Ms. Seitz explained that because no legal definition of "best"
is provided in regard to the phrase "borrower's best interest"
the amendment removes the word "best" from Sec. 06.60.430 lines
28 and 30. It also clarifies other restrictions that may be used
to determine what is in the borrower's best interest.
Co-Chair Green read the amended language, "may include but are
not limited to".
Ms. Seitz continued that the amendment also modifies the
requirements for escrow accounts in Sec. 06.60.440, creating a
new subsection (d) in that section to regulate how those funds
shall be managed.
Co-Chair Green read the language added by the amendment.
3:57:31 PM
Co-Chair Green asked Senator Bunde, as Chair of the Labor &
Commerce Committee, if he found the changes acceptable.
Senator Bunde affirmed.
Co-Chair Green removed her objection.
Amendment #2 was ADOPTED without further objection.
3:57:57 PM
Senator Bunde moved to report the bill, as amended, from
Committee with individual recommendations and accompanying
fiscal notes.
There being no objection, CS SB 272(FIN) was REPORTED from
Committee with $259,200 fiscal note #1 from the Department of
Commerce, Community and Economic Development.
AT EASE 3:58:53 PM / 3:59:09 PM
CS FOR SENATE BILL NO. 309(L&C)
"An Act establishing a construction trades training grant
program for award by the Department of Labor and Workforce
Development, providing for special employee unemployment
contributions to fund the program and an offsetting credit
against the employees' general unemployment contribution,
and providing for an expiration date for the program,
contributions, and credit; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
GREG O'CLARAY, Commissioner, Department of Labor and Workforce
Development, characterized the bill as "must pass legislation"
necessary to meet the State's needs in the construction
industry, and to prepare Alaska's workforce for the potential
formation of a natural gas pipeline in the future.
TOM MAHER, Staff to Senator Therriault, explained the bill and
the sponsor statement [copy on file], which reads as follows.
This legislation responds to the upcoming opportunity to
train resident Alaskans to fill the thousands of high
paying jobs that will be created in the construction of a
gas pipeline by providing a stable stream of revenue,
subject to legislative appropriation, to Alaska Work
Partnership, Inc. or other qualified nonprofits for both
training and increasing the capacity of training
facilities.
With a project as large as the gas pipeline and the
thousands of jobs it will create, we must start now to make
sure resident Alaskans are trained and employable. This
bill provides the multi-year commitment necessary to do
that. This funding will leverage industry investment in
training facilities and equipment to build private sector
training capacity and increase industry capability for
sustaining training into the future.
In 2005 there were more than 20,000 individuals employed in
Alaska construction trades with annual incomes approaching
$60,000. Unfortunately, one in every five jobs, or 20%
belongs to individuals, who according to Permanent Fund
Dividend Eligibility are recent arrivals to Alaska. These
high paying jobs will continue to attract workers from
other states and countries. Also, with our 45% of our
resident construction workforce being over 45 years old,
industry must renew it's workforce with thousands of
appropriately training workers.
Alaska Works Partnership, Inc. has developed successful
programs that are proven effective in moving residents into
construction jobs. In the past five years AWP has helped
more than 1,000 residents become employed in construction.
More than 85% of the residents AWP has served are employed
in construction as a result of training. More than 90% of
the workers Alaska Work Partnership, Inc. trains are not
members of a union. The majority of workers placed in jobs
work for non-union employers.
SB 309 will divert 1/10th of a percent of current employee
contributions to a new "holding account" for appropriation
by the Legislature. Estimated income to the account is
projected to be over five million a year. With increased
payroll within the state, the Department of Labor has
projected that it is highly unlikely that this small
percentage diversion will cause any increase in
unemployment insurance rates.
The Senate Labor and Commerce Committee amended this
legislation to allow grants to other nonprofit
corporations, as determined by the Commissioner, to be
qualified and capable of providing this training.
SB 309 is slated to sunset in six years and requires an
annual report on performance.
Mr. Maher overviewed the fiscal notes, and noted the six-year
termination date with annual reporting requirements. He located
changes made by the Senate Labor & Commerce Committee on page 2
line 12, that allowed for grants to be made to nonprofit
training entities other than AWP.
4:06:48 PM
Mr. Maher referenced numerous letters of support for this bill.
AT EASE 4:07:24 PM /4:08:00 PM
4:08:38 PM
Senator Hoffman requested further information about the
construction labor force's growth of "15 percent over the next
five years" referred to in fiscal note #1.
Commissioner O'Claray replied that the figure was a statewide
projection. He informed that the Alaska Works Partnership (AWP)
trains more rural residents than urban residents, and considered
the program a "good balance". This funding stream would allow
"concerted" training efforts in both rural and urban areas, as
well as redirecting more than $3 million from the State Training
and Employment Program (STEP) fund back to the State for use in
other industries.
Co-Chair Green inquired as to the relation between this bill and
the funding for the proposed King Career Center.
Commissioner O'Claray responded that the King Career Center
would likely receive funding in the FY 07 Capital Budget for a
pilot program and this funding stream would sustain those
programs beyond the pilot period.
Co-Chair Wilken had received comments regarding this bill as a
"union/non-union" issue. He had directed those concerns to
Senator Therriault's office, and hoped Senator Therriault had
addressed those matters.
4:11:32 PM
Senator Bunde reported that the amendment adopted in the Senate
Labor & Commerce Committee offered the opportunity for any non-
profit corporation to apply for funding for training programs
under this bill.
Co-Chair Green asked if that was the language specified on page
2, line 12.
Senator Bunde affirmed.
4:12:24 PM
Co-Chair Wilken was aware of concerns that this bill would
divert monies away from the unemployment insurance (UI) fund. He
asked if UI benefits would be fully funded.
Commissioner O'Claray predicted 20 years of continual growth in
the State's economy, with new employees' UI contributions being
added to the fund along with existing employees'. The affect of
this bill would be "minimal", and would not have an adverse
affect on employers' rates, as the fund is supported by employee
contributions.
Senator Olson asked regarding training of rural residents.
Commissioner O'Claray speculated that approximately 40 percent
of the participants involved in pipeline training in Fairbanks
in recent years were residents of Rural Alaska. He recounted
that AWP trains primarily in rural areas.
Senator Olson inquired where the training had occurred, other
than King Career Center.
Commissioner O'Claray would provide the requested information.
Senator Olson asked if dormitory facilities were available at
the training locations.
Commissioner O'Claray informed that many of the facilities
provide housing for the trainees.
4:15:06 PM
Co-Chair Green asked online testifiers to abbreviate their
testimony in light of the time constraints.
4:15:44 PM
MIKE ANDREWS, Director, Alaska Works Partnership Inc., had
provided a map [copy not provided] indicating the regions where
AWP had conducted training. He urged support for the bill. He
qualified that AWP was formed as another avenue for people to
receive training outside of the traditional union membership.
The two entities are symbiotic, not competitive, and for that
reason, this bill should not be viewed as a "union/non-union"
matter.
4:17:37 PM
JOHN BITNEY, Lobbyist, Alaska State Homebuilders Association,
testified in support of the bill. The Association is not a union
group, but supportive of the bill as "a rising tide floats all
boats". He hoped his Association would be included in the annual
reporting requirements contained in the bill.
4:18:59 PM
RICHARD CATTANACH, Executive Director, Associated General
Contractors, testified via teleconference from an offnet
location in support of the bill.
4:19:21 PM
JAY QUAKENBUSH, President, Building and Construction Trades,
testified via teleconference from Fairbanks and urged support of
the bill. He recognized the potential future natural gas
pipeline as a monumental construction project, and warned that
"our borders are open" for out-of-state workers to fill jobs in
Alaska. He exampled the thousands of workers who came from other
states to work on the construction of the Trans Alaska Pipeline
System (TAPS) and left the state upon completion. He understood
this bill as providing a "proactive" way of addressing
employment issues in Alaska.
4:20:54 PM
JIM LAITI, Business Manager, Pipefitters Local 375, testified
via teleconference from Fairbanks in support of the bill. He
identified demand for construction workers for the proposed
natural gas pipeline, TAPS maintenance, possible development of
the NPR-A area, and Alpine development. These projects
illustrate a need for more trained workers, and he urged support
of the bill.
4:21:56 PM
CLICK BISHOP, testified via teleconference from Fairbanks in
support of the bill.
4:22:26 PM
MIKE SAMSON, President, Samson Electric, testified via
teleconference from Anchorage. He is a member of the Associated
Building Contractors (ABC) and dedicated to the training
process, but was concerned that ABC may not be included in the
program. Neither Samson Electric nor ABC has received any
funding under the STEP program for their training practices. He
would support an amendment to specifically include ABC along
with AWP.
4:24:33 PM
BILL WATTERSON, President, Watterson Construction, testified via
teleconference from Anchorage. His company employs approximately
200 people, and more than 98 percent of payroll checks are
written to Alaska residents. He opined that trained Alaskan
workers are better employees than "boomers" that come to the
state to work for short periods. He informed that over 35
percent of people employed by his company as craft workers are
members of ethnic minority groups. He would support the bill if
the employer was allowed to designate which training program
their contribution would fund.
4:26:40 PM
JULIE AUNE, Vice President, AAA Fence, testified via
teleconference from Anchorage. She represents a small, family
owned company with no means to train employees as there are no
specialty training programs. She would like to be able to chose
the training provider if her company is contributing financially
in any way.
4:28:38 PM
MIKE SEXTON, Executive Director, Mechanical Contractors of
Fairbanks, testified via teleconference from Fairbanks in
support of the bill, and encouraged its passage.
4:29:12 PM
WENDY REDMAN, University of Alaska, testified via teleconference
from Fairbanks in support of the bill. The University does not
have the capacity to provide this type of training, and has
therefore partnered with Alaska Works and ABC to develop
training programs.
4:30:10 PM
REBECCA LOGAN, President, Associated Building and Contractors
(ABC) of Alaska, testified via teleconference from Anchorage.
She commented that ABC supports the concept of the bill, but
does not support the "delivery". She considered the training
contract that this legislation proposed to award solely to AWP a
"procurement" issue that was not open to the competitive bidding
process that other State grants are subject to.
4:31:00 PM
Co-Chair Green asked if a restriction would be placed on
awarding funds to a non-profit entity other than Alaska Works.
Commissioner O'Claray replied that there was no such
prohibition. The aforementioned amendment adopted in the Senate
Labor & Commerce Committee substitute clarified that issue.
Co-Chair Green furthered, asking if a group of companies would
have to form a nonprofit training center to qualify for funding.
4:31:41 PM
Senator Bunde responded that a consortium of building
contractors would need a non-profit entity to receive funding
monies, rather than the State awarding training funds to the
construction company directly.
Co-Chair Green informed that she would support the bill only if
she could be assured that private companies would be able to
organize to receive funding for their collective training
practices.
Commissioner O'Claray guaranteed this bill was developed to be
non-partisan in regard to the union/non-union issue. He asserted
that there are many people to train, and the bill endeavors to
encompass as many employees as possible.
Co-Chair Green appreciated Commissioner O'Claray's "positive
attitude".
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, CSSB 309(L&C) was REPORTED from
Committee with two fiscal notes from the Department of Labor and
Workforce Development: fiscal note #1 in the amount of
$5,043,300, and fiscal note #2 for $247,700.
4:33:51 PM
SENATE BILL NO. 317
"An Act relating to the purchase by the Alaska Housing
Finance Corporation of a parking garage in Anchorage,
Alaska and approving the issuance of bonds for the purchase
of that parking garage; providing notice of, and
authorizing the commissioner of the Department of
Administration to enter into, a lease-purchase agreement
with the Alaska Housing Finance Corporation for that
parking garage; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
SCOTT NORDSTRAND, Commissioner, Department of Administration,
introduced the bill, and explained it as a proposal to build a
parking garage to serve the Atwood Building in downtown
Anchorage.
4:34:45 PM
Commissioner Nordstrand referred to a presentation titled
"Atwood Building Parking Center" [copy on file]. He explained
that the State purchased the Atwood Building and the adjacent
"Block 80" lot at the same time, and had since used Block 80 as
a parking area for State employees working in the Atwood
Building. He directed attention to the map on page 3 of the
presentation. The Municipality of Anchorage and the State
recently concluded negotiations to sell Block 80 to the
Municipality for construction of a convention center.
Commissioner Nordstrand continued that the State was compensated
in a "block for block" trade, and acquired one half of "Block
70" directly across the street from the Atwood Building, where
the Dimond Center parking lot is currently located. In addition,
the State was paid market value of $2.3 million by the
Municipality of Anchorage for the other half of Block 80. The
State is statutorily required to provide 40 visitor parking
places as well as a specified number of handicap parking places
within one half block from the door of the Atwood Building, in
addition to employee parking, for a total of approximately 930
parking spaces. These parking needs are currently met with
multiple parking lots within a 12 square block area.
4:38:54 PM
This bill proposes a long term solution to the Atwood Building's
parking issues in the form of a parking structure to be built on
the State's portion of Block 70. As part of the negotiated terms
between the State and the Municipality, the State committed to
build a parking garage within seven years on Block 70, or to
allow the Municipality the option to buy back the lot at market
value to do so themselves. The erection of a parking structure
would enable the State to sell Block 102, currently used for
parking and valued at approximately $4 million, and put those
funds into the parking facility.
The parking facility would include a "skybridge" to the Atwood
Building, as the building was configured to receive that type of
overpass. Per request of the Mayor of Anchorage, the ground
level would be available for lease by retail stores, resulting
in additional income generated by the parking facility.
Commissioner Nordstrand reported that the Alaska Housing Finance
Corporation (AHFC) owns the Atwood Building; the State
Department of Administration leases the space from AHFC, and
charges the departments that occupy the offices. The
Municipality was once planning to build the parking garage
themselves, but found it financially burdensome. Under this
proposal, the developer retained by the Municipality of
Anchorage would be used by the State to design and construct the
facility. The State would engage an independent cost expert to
determine a fixed price for the project which would be agreed to
by both parties. AHFC would issue the debt for construction of
the facility and purchase the completed parking garage from the
Municipality, whereby the Department of Administration would
lease the structure. Commissioner Nordstrand anticipated the
construction bonds would be paid off in 21 years, at which time
the deed for the parking garage would be turned over to the
State. This bill requested authority to bond for up to $44
million, although he did not anticipate the cost would be that
high. If, however, the project incurred the maximum amount of
debt, the annual debt payment would be $3.7 million for 21
years. The debt would be issued at the beginning of construction
to pay for construction expenses.
4:43:12 PM
Commissioner Nordstrand estimated the cost of the project to be
approximately $1.22 per square foot, if the full bond amount was
issued. The State currently pays roughly $1.30 per square foot
for the offices in the Atwood Building, bringing the total new
lease rate to $2.52 per square foot. The market rate for this
type of office accommodations in Anchorage averages
approximately $2.75.
4:44:12 PM
Commissioner Nordstrand assumed that the cost to lease parking
spaces would increase with time. An escalation in parking fees
would provide cost avoidance savings to the State, as well as
generate additional income by renting spaces in the parking
structure for after-hours and weekend parking. In addition to
retail lease income and revenues from the sale of surrounding
parking areas, including Block 80 and Block 102, he projected
the parking facility would generate the equivalent of $23.5
million. He considered these figures evidence of the State's
ability to "buy down the debt".
4:45:59 PM
Commissioner Nordstrand summarized that the demand for parking
would remain constant, if not increase, in the future, and the
construction of a parking facility would allow the State and the
occupants of the Atwood Building to provide for their own needs
rather than paying market price for rented parking.
4:46:21 PM
Commissioner Nordstrand added that the parking structure would
provide "safety and convenience" for visitors to the Atwood
Building, as well as State employees.
4:46:41 PM
Senator Hoffman asked how Block 102 would be sold.
Commissioner Nordstrand answered that the parcel would be sold
"competitively". The lot was appraised for approximately $3.7
million in January 2006, and he expected the value to increase
dramatically with the completion of the nearby convention
center.
Senator Hoffman assumed the land would be advertised publiclly.
Commissioner Nordstrand affirmed.
4:47:33 PM
Senator Olson asked regarding maintenance and operating costs
related to the facility.
Commissioner Nordstrand replied that operating the parking
structure would incur costs, such as management of the lease
space and employment of a parking attendant, but he was unsure
what the total cost would be. He expected the costs would be
"minimal", and operations may be handled by the Atwood Building
managers or the Anchorage Parking Authority.
4:48:31 PM
Co-Chair Wilken was frustrated with the decision to bond for
this project and invest $30 million in debt services. He pointed
to the $2.5 billion in the Constitutional Budget Reserve (CBR)
account and $2 billion in the Earnings Reserve Account (ERA) as
possible revenue sources to pay for the parking facility
outright, thus avoiding the $30 million the State would pay in
interest under the current proposal.
4:49:46 PM
DAN FAUSKE, CEO, Alaska Housing Finance Corporation, testified
via teleconference from an offnet location. He directed
attention to Sec. 2(b) on page 2, line 16, and noted that the
terms of the bonds should indicate a 21-year period rather than
20 years.
4:50:16 PM
Commissioner Nordstrand confirmed this.
Co-Chair Green voiced support for the bill.
Co-Chair Wilken moved to report the bill from Committee with
individual recommendations and accompanying fiscal notes.
There being no objection, SB 317 was REPORTED from Committee
with zero fiscal note #1 from the Department of Administration.
4:51:21 PM
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 4:51:42 PM.
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